Repercussions of banking concentration on stability and competition within the financial sector : a literature review
AuthorsRestrepo Cardona, Fernán
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Mergers are, in general terms, any substantial acquisition of the assets or stock of another firm, normally involving a process through which two entities become a single one2. The purpose of this paper is to describe the effects of such operations on competition and stability in the banking sector. In this sense, section one reviews the theoretical and empirical literature regarding the incidence of bank mergers on loan rates, quantities lent to small businesses and retail deposit markets (variables deemed as competition indicators). Correlatively, section two describes the different postures related to the stability outcomes of bank consolidation. Section three sketches out the administrative or institutional consequences of the stability and competition concerns related to concentration within the financial system. Finally, section four concludes.